Ofo Becomes Chinese Bike-Sharing Unicorn After Giant Fundraising

Ofo convinced Citic Private Equity, Matrix Partners, Coatue Management, Atomico and Macrolink Group to join its Series-D round, company spokesman Shi Shaochen said on Wednesday. The startup, whose no-frills yellow bicycles are a common sight on college campuses and city streets, will use the cash to vie with well-funded Beijing-based rival Mobike both at home and abroad, according to Bloomberg.

Mobike closed its own Series-D this year, raising more than $300 million without disclosing its valuation. Mobike’s backers now include Tencent Holdings Ltd., Warburg Pincus, and Sequoia Capital.

Once emblematic of China’s socialist working class, bicycles remain popular among students and urban commuters despite rapidly growing car ownership. The industry has drawn more than a billion dollars from investors betting that bicycles offer a more traditional alternative to the car-hailing that prevails in urban centers.

Ofo has brokered more than 300 million rides and has more than 20 million users with operations in nearly 40 cities in China, the U.S., Singapore and the U.K., the company said in a statement.

Mobike and Ofo are among the two largest of a growing crop of Chinese private bike-sharing operators. Unlike similar services operated by local governments around the world, their users find and pay for bicycles via a smartphone app and then leave them wherever they want. Profit has been elusive and both companies have to deal with a plethora of issues, from vandalism to outright theft of its bicycles.

Despite the uncertainty of profits in the short term, both are spending heavily on promotions and discounts in a race to build scale, which as offering all commuters a day of free rides. Mobike, known for its distinctive orange-hued and GPS-equipped two-wheelers, intends to launch in Singapore this year.